C4i Issues Presidential Advisory Memo on Health Care Policy

Americans have ranked health care as one of the issues most important to them. In early 2020, the nonpartisan Law & Medicine Initiative at the UC Law SF Center for Innovation (C4i) issued a presidential advisory memo to the presidential campaigns and has updated it subsequently for the administration of President-elect Biden.

The memo outlines evidence identified by C4i that provides important insights for improving health care policy and markets, including:

  • Across health insurer formularies, the percentage of generics on the most preferred tier for patients dropped from 73% to 28% from 2010 to 2017;
  • During the same period, the percentage of drugs placed on inappropriate tiers in relation to drugs with the same active ingredient increased from 47% to 74%;
  • From 2005-2015, 78% of drugs with new patents were not new drugs but ones already on the market.

“Providing affordability, access, and quality is challenging, particularly in a world that is as strange and convoluted as today’s health care system. C4i’s work shines light on the these murky areas,” said Robin Feldman, Arthur J. Goldberg Distinguished Professor of Law and C4i Director. “Our hope is to provide clear, actionable evidence to help everyone in the public arena develop effective health care policies.”

The memo highlights five recommendations for President-elect Biden to consider as he develops his health care policy, including:

  • Implement a “one-and-done” approach to pharmaceutical patent law in which each drug receives one—and only one—period of market protection.
  • Make list price determine each drug’s placement on formulary tiers. List price—that badly maligned, roundly dismissed figure—should become the holy grail for health insurer drug pricing. Using list price would decrease the incentive-distorting rebate schemes while recognizing that many people already pay full list price.
  • Use value-based pricing only when the value of a drug is measured in relation to the nation’s overall health needs, considers all diseases, and weighs the long-term, evidence-based outcomes. Value-based pricing cannot mean “the sky’s the limit.”
  • Ruthlessly simplify. In the case of the Hatch-Waxman and Biologics Act systems for approval of cheaper drugs, with their complicated patent challenge systems, they have spawned too many opportunities for manipulation. In contrast, a simplified, slimmed-down system would provide fewer opportunities for clever gamesmanship and require fewer resources as a whole.
  • Improve transparency of drug pricing information across industry and governmental health care agencies. From peeling back the veil on rebate deals and actual drug prices to expanding the Federal Drug Administration’s (FDA) disclosure of drug application information and data, there is much to be improved. Greater clarity will thwart abuses and support public accountability of the health care system.

“Medicines can’t work if patients can’t afford them,” said Feldman. “Competition can’t work if cheaper drugs are pushed aside. We have the tools to fix these problems. We just need the pollical will.”

The full policy memo can be found online at the Center for Innovation.


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Thumbnail photo credit: Doug Waldron